Policy

Policy Agenda

AAEA continues to influence the state’s energy policy landscape focusing on initiatives that will expand business opportunities for Arkansas Advanced Energy companies. See below for AAEA's policy priorities for 2017.

Our mission

As the business voice for
advanced energy in Arkansas, AAEA is dedicated to growing Arkansas’s economy
through expanded utilization of advanced energy technologies that make our
energy supply more secure, clean and affordable.

2017 Legislative and Regulatory
Prioritie

I. Arkansas Public Service Commission Docket
16-027-R

- The Arkansas
Public Service Commission (APSC) opened two pivotal dockets in 2016 that will
have major impacts on the renewable energy market place in Arkansas. AAEA
sought and received intervening party status on Dockets 16-027-R and 16-028-U.

- In 16-027-R, the Commission is exercising its
authority under ACT 827 to establish certain guidelines for net metering
facilities to exceed current generating capacity limits and to establish a
revised rate structure for net metering customers. The revised rate structure
issue has been assigned to a Net Metering Working Group consisting of all
interested parties.

- AAEA
is arguing strongly, along with others in the industry, that existing customers
should be grandfathered permanently under current rates. As one AAEA solar
company states, changing the rules for existing customers after they have
already invested in a net metering facility would severely depress the PV
market in Arkansas.

II. Arkansas
Public Service Commission Docket 16-028-U

- The APSC went beyond the requirements of Act
827 to open the second docket, 16-028-U, which represents an historic attempt
by the Commission to more broadly consider the full range of issues in order to
“consider whether any change is warranted in the Commission’s policies related
to renewable DG, beyond those policy changes contemplated in Docket 16-027-R.”
AAEA used the opportunity to suggest several policy changes. See below.
However, their individual success depends largely on the support and
action of the Commission.

- Third-Party
Generation: Many companies wish to procure power from onsite resources such as
solar, storage, fuel cells, or small-scale wind, while still remaining
connected to the utility grid. AAEA
supports third-party generation and considers this option as priority one.

- Utility
Renewable Energy Tariffs:AAEA
supports the ability of commercial, industrial, and residential electric
consumers to procure renewable energy through their utility, avoiding the
additional work and due diligence required to pursue onsite generation or contract
with an offsite project.The use of
such tariffs is common in other states. These tariffs can be structured to
minimize rate impacts on other utility customers.

- Utility-enabled
Power Purchase Agreements: Utility-enabled Power Purchase Agreements
(“UPPAs”) allow companies in regulated markets to contract with a renewable
energy project, with the utility agreeing to act as an intermediary to deliver
the power from the renewable energy project to the customer. AAEA supports this third option to expand
renewable energy use by commercial and industrial companies operating in
Arkansas.

- Direct
Access Tariffs: Several traditionally regulated states offer
some degree of retail choice, often termed Direct Access, allowing certain
customers, usually large energy users, to purchase power from an energy
supplier rather than the local distribution utility. AAEA supports direct access tariffs.

- Access to PACE financing expanded to more
customers in 2015-16. Pulaski County launched a program and issued program
rules in July while Energy Improvement District Number 1 in Northwest Arkansas
doubled in size when Springdale joined the district’s originator, the City of
Fayetteville, in August 2016. Arkansas Advanced Energy Equity (A2E2), which is
an LLC formed by AAEA, won administrator contracts in both jurisdictions and
entered the third quarter of 2016 with several potential projects underway.

- Signed into law by Governor Beebe in April
2013, the Arkansas local-option PACE program authorizes the voluntary creation
of energy improvement districts to fund loans for 100% of the cost of energy
savings projects by interested property owners. The loans are repaid via a
special assessment on the owner’s property. Loan payments are generally less
than the amount of energy savings achieved, so most business owners experience
an increase in cash flow. Without access to low-cost financing opportunities,
Arkansas property owners must typically bear the upfront costs of energy-saving
projects, an obstacle that has stymied many energy-saving projects in Arkansas.

- PACE has demonstrated its value with several
projects currently in development but technical corrections are needed to
ensure the program reaches its full potential as a robust engine of economic
development. AAEA will advocate for these needed changes in partnership with
other stakeholders.

IV. Arkansas
Energy Performance Contracting (AEPC) program

- After two years in operation, the Arkansas
Energy Performance Contracting Program is in full stride. Energy service
providers joined representatives of Arkansas state agencies, colleges and
universities and cities and counties in June 2016 for the Arkansas Energy
Performance Contracting (AEPC) Summit hosted by AAEA and the Arkansas Economic
Development Commission – Arkansas Energy Office.

- Since it was first launched in November 2014
as one of AAEA’s top priority policy initiatives, the program has undergone
several important legislative and administrative changes, including adoption of
the Local Government Energy Efficiency Project Bond Act by the Arkansas
legislature in 2015 enabling cities and counties to issue tax exempt bonds for energy
efficiency projects that can be certified through the AEPC program.

- The AEPC program enables taxpayer-funded
public entities to reduce costs, improve the comfort and quality of public
buildings and address pressing deferred maintenance issues at no upfront cost.
A jobs study commissioned by the Arkansas Advanced Energy Foundation found that
nearly 700 companies that employ more than 16,000 Arkansans are in the advanced
energy economy. About 60 percent of those jobs are tied to energy savings equipment
and services and will be directly affected by a vibrant AEPC program.

- Several large Energy Service Companies have
made significant investments in Arkansas while home-grown ESCOs are also
growing exponentially in response to the AEPC program. Qualified providers
under the program that participated in the 2016 AEPC Summit include Willdan/360
Energy Engineers; Clear Energy, Inc. and Performance Services; Harrison Energy
Partners; Johnson Controls, Inc.; Entegrity Energy Partners; Powers of
Arkansas; Schneider Electric and Siemens.

- AAEA
will continue to advocate for AEPC’s future success and monitor legislative
proposals that would weaken the program.

V. Public
Utility Energy Efficiency Programs

- Under the Energy Efficiency Resource Standard
adopted by the Arkansas Public Service Commission in December 2010, utility
energy efficiency programs have proven to be an important economic driver for
Arkansas and advanced energy technologies.

- AAEA has participated for four years in the
Parties Working Collaboratively (PWC) with the state’s seven public utilities
and other interested parties to develop a plan to extend programs through
2019. In testimony filed before the APSC
on August 1, 2016, Dr. Katherine Johnson, Independent Evaluation Monitor for
the Utility programs; the Commission professional staff and all parties
including the seven investor-owned utilities (IOU) and AAEA stated that “the
energy efficiency (EE) programs continue to make excellent progress towards
achieving their energy savings and participation goals.”

- The EM&V (Evaluation, Measurement, and
Verification) findings confirmed “that customer satisfaction remains high
across the entire Arkansas EE program portfolio of measures. Most of the IOU
programs exceeded their energy savings goals. The four electric utilities
achieved 108 percent of their 2015 savings goals while the three natural gas
IOUs achieved 102 percent of their targets. SWEPCO lead the utilities by
achieving 119% of its target. A total of
282, 558,338 kwhs and 4,891,135 therms were saved by the IOUs.

- AAEA
will continue its participation on the PWC and its support of the
utility-operated energy efficiency programs for 2017.

VI. Integrated Resource
Plans

- Each electric utility that operates in
Arkansas is required every three years to provide an updated integrated
resource plan (IRP) that encompasses a 10-year forecast. SWEPCO, OG&E, Entergy, and the Arkansas
Electric Cooperatives submitted their IRPs in 2015 for the years 2016-2019. An IRP explains how a utility plans to meet
the projected capacity and energy requirements of its customers. Utilities in their IRPs must consider the
impact of environmental rules, commodity prices, generation resources, energy
efficiency, etc.

- AAEA along with other stakeholders in 2015
engaged Entergy and SWEPCO in the preparation of those utilities’ IRPs. The IRP process is an important opportunity
to engage a utility on energy efficiency, renewable energy resources, and other
advanced energy technologies. The next
IRP process will take place in 2018.

VII.
Clean Power Plan

- The EPA’s “Clean
Power Plan” (CPP) rule requires states to reduce carbon emissions from existing
power plants. On February 9, 2016, the Supreme Court stayed implementation of
CPP pending judicial review. The U.S. Court
of Appeals for the D.C. Circuit, sitting en banc on September 27th, heard oral
argument in West Virginia v. EPA. It is
uncertain when the D.C. Circuit will rule and what it will rule.

- AAEA’s national
partner, Advanced Energy Economy (AEE), intervened in the case on behalf of the
advanced energy industry. AEE is committed to working with the new
Administration on meeting the nation’s energy challenges by scaling advanced
energy, including through continued work on the CPP. AAEA as one of AEE’s state partners will coordinate closely with AEE in
advocating support of CPP and cost-effective carbon reduction energy
strategies.

VII. Arkansas
Energy Office

- Governor Asa
Hutchinson has announced his intention to move the Arkansas Energy Office (AEO)
from the Arkansas Economic Development Commission (AEDC) to the Arkansas
Department of Environmental Quality (ADEQ).
AEO is the recipient of federal Department of Energy grants and utility
funding to offer energy efficiency savings programs to low-income residents; to
develop alternative transportation fuel opportunities such as natural gas; to
manage the state Energy Performance Contracting Program; and other energy
programs.

- AAEA has
been supportive of AEO and its programs and in the past has met with AEDC
officials in support of the office’s mission.
AAEA and AEO worked closely together to create the Energy Performance
Contracting Program and co-hosted legislative candidate workshops. As AEO
transitions to a new department, it is important that AAEA maintains its
support of the Energy Office and that the Governor and the ADEQ administration
are aware of this support and AAEA’s desire for AEO to prosper.